After #MeToo, Insurers Are Forcing More Execs Into Training, But Raising Premiums Selectively

The #MeToo Movement has led to higher sexual harassment insurance costs in only some industries, including media, law and medicine (Photo by Erik McGregor/Pacific Press/LightRocket via Getty Images)

The #MeToo movement is forcing more CEOs and other top executives into corporate training rooms. Carriers offering Employment Practices Liability (EPL) insurance for sexual assault and discrimination claims are now demanding companies institute or update anti-harassment policies and procedures and are also making sure that anti-harassment training actually takes place. The days of check-the-box (for training) are over, said Marsh Employment Practices Liability Product Leader, Kelly Thoerig.

But the carriers aren't increasing EPL rates and deductibles across the board, because they haven't yet seen an increase in sexual harassment claims filings, Thoerig added. “It’s a surge we are waiting to happen,” the insurance industry consultant said.

EPL costs are typically based on head count. For a media company with 20,000 employees, the deductible was probably $2.5 million before #MeToo. Now it’s likely $5 million, Hams said.

Beyond higher premiums and deductibles, a small slice of companies can't get new coverage at all. The #MeToo Movement went viral last October after The New York Times reported over a dozen women had accused now-deposed movie producer Harvey Weinstein of sexual harassment and assaults. Since then, insurers have stopped writing new EPL policies for studio/production companies, reports Michael McCloskey, a risk management professor at Temple University.

Aon's Hams noted there is also increased scrutiny by EPL insurers on anti-retaliation policies. Fear of retaliation is one of the biggest barriers keeping women who believe they have been victims of sexual harassment from coming forward, he added.

AmWINS, a global specialty insurance distributor, forecast in January that EPL premiums will rise as sexual harassment claims increase in their severity and frequency. The company is expecting to see more first-time buyers and more current buyers looking for higher limits. The insurance distributor noted California and other states require employers with 50 or more employees to provide two hours of sexual harassment prevention training to all supervisors every two years.

Experts in business insurance for sexual harassment claims say it is a common misconception that D&O (directors and officers) policies are how companies try to manage their exposure. Instead, EPL is the type of policy they use. D&O refers to directors and high-level executives who are elected by boards.So, CEOs and general counsels would be covered by D&O polices. Vice presidents of marketing and logistics wouldn't be.

As a rule of thumb, D&O protects against harm to financial assets such as stock fraud and theft while EPL is focused on damage done to businesses by harm to men and women, including sexual harassment and discrimination based on gender, sexual preference, race, and national origin.

Public companies typically obtain EPL coverage separate from their D&O insurance while EPL can be included in D&O for private firms and non-profits.

An earlier version of this story misspelled the name of Aon's Tom Hams.